Wednesday, January 11, 2012

CONSOLIDATING GAINS

Indian benchmark equity indices, after vehemently surging over two percent in the previous session, went on to consolidate the gains in Wednesday's session by settling just above the neutral line. It turned out to be a range bound session for the frontline indices which somehow managed to cling on to the levels reached on Tuesday as investors at large chose to play the waiting game a day ahead of a series of developments both from the domestic as well as global front which will pave the way forward for the local bourses. Market participants chose to remain on the sidelines ahead of the release of industrial production (IIP) data for November, amid speculations that IIP might bounce back into the positive terrain at an annual rate of 2.2 percent a month after plunging to -5.1%, the lowest levels in 28 months. Investors also remained cautious ahead of the quarterly earnings season which will formally commence after bellwether Infosys' result announcement on January 12, 2012, while one of India's leading lenders HDFC too is going to announce result for third quarter of FY 2011-12. However, the upside for local markets was limited as leads from Asian space remained mixed while some caution prevailed in the European markets as well, ahead of debt auctions in Germany, Italy and Spain, the next focus of the region's long-running debt crisis which undermined the optimism over US corporate earnings and strong economic reports. Meanwhile, global ratings agency Fitch Ratings opined that it will not downgrade France this year, alleviating investors' anxiety over the Euro-zone debt crisis to some extent as a downgrade would have made it more expensive for France to raise cash to deal with the crisis. Back home, after getting some indications that India's economic activity is re-gathering momentum with the manufacturing and services PMI signaling expansion, another confirmation of the fact came to the fore as Asia's third largest economy registered sharp surge of 56% in foreign direct investment (FDI) in the month of November 2011.
Earlier on Dalal Street, the benchmark got off to a flat opening, following cautious sentiments prevailing in Asian markets. The frontline indices gathered some momentum and touched intraday highs in early afternoon trades but remained in a narrow range through the day's trade. Though some selling pressure surfaced after weak European opening post which the indices slipped into the negative territory but some recovery in the last leg of trade ensured that the key indices end second straight session in the green zone. Finally the NSE's 50-share broadly followed index Nifty, gained a quarter percent to settle a tad above the crucial 4,850 support level while Bombay Stock Exchange's Sensitive Index Sensex added a paltry ten points and ended above the psychological 16,150 mark. Moreover, the broader markets were in the league of their own and rallied over a percent, outperforming their larger peers by a fat margin. On the BSE sectoral space, the high beta Realty counter once again remained the top gainer in the space with over four and half a percent gains while the beaten down Metal counter too shone brightly with over two percent gains. On the flipside information technology counter remained under moderate pressure as the rupee strengthened to one month highs in the previous session while investors also were cautious ahead of bellwether Infosys' result announcement. The markets consolidated on weaker volumes of over Rs 1.03 lakh core while the turnover for NSE F&O segment also remained on the lower side as compared to that on Tuesday at over 0.86 lakh crore. The market breadth remained extremely optimistic as there were 1868 shares on the gaining side against 951 shares on the losing side while 117 shares remained unchanged.
Finally, the BSE Sensex gained 10.77 points or 0.07% to settle at 16,175.86, while the S&P CNX Nifty rose by 11.40 points or 0.24% to close at 4,860.95.
The BSE Sensex touched a high and a low of 16,244.70 and 16,127.77 respectively. The BSE Mid cap and Small cap indices up by 1.00% and 1.32% respectively.
The major gainers on the Sensex were Hindalco up 5.69%, Sterlite Industries up 4.85%, DLF up 3.41%, Tata Steel up 2.88% and Hero MotoCorp up 1.97%. While, TCS down 2.54%, Jindal Steel down 2.16%, M&M down 1.60%, Bharti Airtel down 1.54%  and Cipla down 1.53%, were the major losers on the index.
On the BSE sectoral space, Realty up 4.64%, Metal up 2.26%, Bankex up 1.12%, Oil & Gas up 1.02% and Capital Goods (CG) up 0.74% were the top gainers, while IT down 1.42%, TECk down 1.21% and FMCG down 0.68% were the top losers on the BSE sectoral space.
Meanwhile, after getting some indications that India's economic activity is re-gathering momentum with the manufacturing and services PMI signaling expansion, another confirmation of the fact came to the fore as Asia's third largest economy registered sharp surge of 56 percent in foreign direct investment (FDI) in the month of November 2011. After two months of declining, inflow of foreign money into the nation stood at $2.53 billion in November as compared to $1.62 billion in the same month last year.
Meanwhile, cumulative FDI into India for the April-November period went up by 62.81 percent to $22.83 billion against $14.02 billion a year ago while it was also higher than $19.43 billion which came in the full fiscal year of 2010-11. With this kind of trend continuing till the end of current fiscal, the FDI in full fiscal year might even surpass the $30 billion mark which will positively impact the foreign exchange market.
The major sources of FDI for India are Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE. Sectors which attracted the maximum funds include services, construction activities, power, computers and hardware, telecom and housing and real estate.
Meanwhile, based on the recommendations of Foreign Investment Promotion Board (FIPB), government has approved twenty proposals of FDI amounting to around Rs 1,935.24 crore. The government cleared Sterlite Grid's Rs 1,150 crore proposal to act as an investment company. Besides, the board also cleared proposal of Equitas Micro Finance involving foreign investment of Rs 230 core and TV Vision's proposal to induct foreign investment worth Rs 200 crore by way of issue of equity shares though an IPO for undertaking the business of broadcasting a non-news and current affairs TV channel has also been cleared.
However, decision on 23 proposals including that of Rossell Aviation and Alliance Data Pte, Singapore, was deferred and 10 were rejected.  Meanwhile, one proposal relating to G4S Security Services was withdrawn and another of MNP Interconnection Telecom Solutions was noted. 
Further, the Ministry of Finance will consider 25 proposals including that of Ashok Leyland Defence Systems, Tata AutoComp GY Batteries, Singapore-based Amazon Asia-Pacific Resources, Italy-based Canali Holding, Timex Garments, Fluke South East Asia Pte, Deltronix India, Zipcash Card Services, JT International India, and Cigniti Technologies for overseas investment at the Foreign Investment Promotion Board (FIPB) meeting to be held on January 20.
The S&P CNX Nifty touched a high and low of 4,877.20 and 4,841.60, respectively.
The top gainers on the Nifty were Hindalco up 6.01%, Sesa Goa up 5.67%, Axis Bank up 5.39%, Sterlite Industries up 5.11% and BPCL up 4.83%.
On the flip side, Powergrid down 2.58%, TCS down 2.50%, Jindal Steel down 2.49%, Grasim down 2.31% and Cipla down 1.65% were the top losers on the index.
The European markets were trading mixed. France's CAC 40 up 0.15%, Britain's FTSE 100 down by 0.28% and Germany's DAX down by 0.16%.
Most of the Asian markets ended higher on Wednesday, with resource and financial-sector stocks underpinning the gains after a strong performance for global equities and commodities a day earlier. Overall market sentiment remained cautious about the prospects of Europe extricating itself from its deep-rooted debt problems any time soon. Meanwhile, Nikkei edged higher, taking comfort from a rise on Wall Street, though the debt turmoil in the euro zone capped gains. However, South Korean stocks ended lower, dragged down by computer-driven programme selling a day before options expiry. Chinese stocks declined for the first time in four trading days, as coal miners returned some of this week's advances on profit-taking.

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